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Prop 56 Passes With Higher Taxes On Vapor Products Expected In California

prop_56On Tuesday, California residents voted on Proposition 56, a controversial measure that would raise the tobacco tax on cigarettes from 87 cents per pack to $2.87. The tax on the state’s tobacco products has not been raised since 1999, and now, for the first time, vapor products will also be hit with a substantial tax increase as well.

Despite efforts by interest groups to sway the minds of state residents to vote against Prop 56, the measure led 62.4% to 37.6% in late returns, according to the secretary of state’s office.

While it has not yet been confirmed, industry people speculate that the tax on vapor products would be between 60-70%, which would undoubtedly lead to vape shops closing their doors, while manufacturers of vapor goods, of which California has many, will likely either suspend production or relocate to remain in business.

An e-cigarette trade group believes that the tax hike would boost the price consumers would pay for a 30 milliliter bottle from the standard $20 to about $30.

Prop 56 was a measure that received bipartisan support, and the feeling among its supporters was that people would ultimately be dissuaded from smoking cigarettes due to the higher cost involved, and that the proposition was necessary in reducing teen smoking.

“Smoking is the number one cause of avoidable death in the state of California,” said Democratic donor Tom Steyer, who was the co-chairman of the Proposition 56 campaign. “We had a broader coalition to support the idea of pushing back against the tobacco companies and raising the cigarette tax than ever before. We believe that that kind of broad coalition works against organized and concentrated economic interests when we stick together and when we all turn out and vote.”

Those against the bill hold a different opinion, with some calling the move a cash grab and one that works to undermine public health for Californians. After all, the smoking rate in California is the second lowest in the country coming in at just 12%, which creates a great deal of skepticism as to why Prop 56 was conceived, and where that tax money will be spent.

Roughly $1.4 billion is the annual revenue expected to be raised in the state from the increased tax, but only about 13% would go towards smoking cessation programs and prevention, according to NPR.

The growing vapor product industry will now need to pay its share in tobacco taxes, with more states expected to follow in the footsteps of the Golden State given enough time.

To read more on this, click here for an article featured in the Los Angeles Times. And you can also read more by clicking here for the SFGATE piece.